Offices in the process of adaptation. What more can we expect?

Comments on the most important conclusions of the report

Renewals in the game, new contracts waiting

The authors of the report At A Glance H1 2020 Regional Office Markets in Poland, published by BNP Paribas Real Estate Poland, point out that the second quarter in eight key markets was marked by agreement renewals, which in the analysed period represented as much as 59% of the total demand. The period between April and the end of June has shown that the health crisis has held up a large share of tenants’ decisions concerning expansion processes or acquisition of new office space. Due to  temporary decision-making lockdown, new contracts accounted only for 28% of demand.

In recent years, offices in the regions have made us accustomed to the fact that the volume of agreements for new space in the pool of total demand varies between 50% and 60%. Rarely had it fallen below 40%. The health crisis has verified the plans of many companies. Some decisions have been put on hold and postponed, some agreements are in the process of being re-examined or renegotiated. A thorough analysis of remote work systems, which will be carried out by tenants alone or in cooperation with consulting companies, will now be of great importanceKlaudia Okoń, Consultant, Research & Consultancy, BNP Paribas Real Estate Poland

It is worth noting that 13% of the total gross demand in Q2 was generated by agreements under which tenants have made or will make expansions into additional space. Experts from the Research and Consultancy Department at BNP Paribas Real Estate Poland also point out that in the entire first half of the year 47% of net demand was for premises in office buildings under construction or projects in the preparatory phase. However, such a result could be attributed primarily to a very strong first quarter.

BPO vs. the pandemic

The office market has already felt the first effects of the health and economic crisis, but the mid- and long-term assessment has yet to be made.  However, there are sectors that can benefit from the coronavirus pandemic. These are companies operating in the so-called modern business services industry (BPO/SSC) as well as technology and IT companies.

Companies from the BPO and IT sectors see growth potential in regional cities, especially Kraków, as well as in Wrocław, Katowice, and Łódź. There, they can find skilled employees, many gifted talents, high standard office facilities, efficient infrastructure and high quality of life. Moreover, it turned out that the majority of these companies turned out to be “coronavirus resistant” to a large extent, and managed to maintain continuity of work, especially given the fact that the home office was not a success everywhereTomasz Skrzypek, Senior Consultant, Office Agency, BNP Paribas Real Estate Poland

Remote working requires adequate premises and access to the necessary technological infrastructure – mobile equipment and a stable Internet connection. The lockdown and introduced restrictions highlighted the lack of preparation for remote working in India, the kingdom of outsourcing.

The pandemic could prove to be a black swan event for the Indian outsourcing sector. As a result of this turmoil, major global players may start actively searching for other, not necessarily cheaper, but certainly safer and more stable destinations. There is a high probability that Polish regional cities will be among the winners of these shiftsTomasz Skrzypek, Senior Consultant, Office Agency, BNP Paribas Real Estate Poland

The latest report on offices in the regional markets shows that in the first half of the year alone BPO/SSC companies signed lease agreements for 139,000 sqm of office space. What’s more, almost half of it was in Krakow.

The virus did not affect developers

By the end of June, 817,000 sqm were under construction in the 8 largest regional cities, which means that none of the major investments were halted due to Covid-19.  Experts from BNP Paribas Real Estate Poland estimate that by the end of the year over 270,000 sqm of modern office space will be delivered. Kraków was again the unquestionable leader in the “Buildings under construction” category, with around 228,000 sqm of office space, of which about 30% is expected to welcome tenants later this year

We hope that we will need to organise our work in a new, previously unknown reality only temporarily. I also do not assume that remote working will become a generally accepted standard, applicable to all teams. The past quarter was an exceptional period due to the lockdown. The most important issue today is and will be the safe return of employees to work. Looking at the long term, in order to meet new sanitary requirements and provide additional space for work and meetings or to move around the office, most companies are interested in using their space in the most efficient way. Contrary to widespread opinions, it may turn out that they will need more of it Mikołaj Laskowski, Head of Office Agency, BNP Paribas Real Estate Poland


BNP Paribas Real Estate Poland

Last Updated on April 26, 2021 by Karolina Ampulska